How do Australia and the US approach commerce media?

The digital advertising spotlight is shining onto commerce media: an emerging force that converges performance, data, content, and customer experience. Marketers globally are already feeling varying degrees of impact – naturally, challenges and opportunities come part and parcel.

Our recent research into global commerce media trends focuses on two key regions: Australia and the United States. Despite their various differences at large – demographics, population size, GDP, et al – there are some remarkable similarities when it comes to their respective media industries.

The full reports surface several key takeaways:

• Technical issues are the biggest challenge to both Australian and US marketers in implementing new strategies

• The traditional funnel model is falling out of favour for measuring outcomes and planning marketing strategies

• Commerce media offers new solutions, channels, and approaches to marketing

• The US is more bullish about commerce media compared to Australia

The key message of our reports is that commerce media is already showing signs that it’ll be the biggest catalyst of change to the industry since programmatic. While the modern iteration of that has had nearly 20 years to mature, commerce media is barely 4 years old, but already has the potential to completely change the industry. It’s an opportunity too great for marketers to miss.

Economic and technical issues are common challenges

Both markets face similar headwinds, with technical challenges being the most significant. With digital marketing and advertising changing incredibly rapidly – not to mention consumer behaviour – it is very difficult to keep up with changes in specific systems, platforms, specifications, tools, and other developing technologies. Respondents cited specific technical issues including integration complexity, attribution limitations, and data privacy compliance.

For Australian marketers, economic conditions are the main factor in determining budget decisions; for US counterparts it’s campaign performance. Both of these factors ultimately point to the same underlying pressure: proving return on ad spend (ROAS) in an environment that prioritises performance marketing.  

It’s a matter of scale too. Given that Australia’s ad market is a modest $14.72 billion USD compared to the US’s colossal $424.94 billion (EMARKETER Forecast, Nov 2024) – it makes sense that local marketers are counting their coins. Conversely, US marketers may have a big pot to tap into but that also means the motivation to grow that return is paramount.

Cross-channel also remains a sticking point, especially for larger organisations. Australian teams report greater difficulty (82%) than US groups (64%), reflecting common structural issues like siloed teams, disparate technology, and fragmented measurement frameworks.

The collapse of the funnel

It’s becoming increasingly apparent that the funnel model is losing relevance in the modern media landscape. Consumers no longer engage with media nor make purchase decisions in a linear fashion as dictated by the traditional funnel concept.

While most marketers from both Australia (66%) and the US (61%) attempt to track outcomes across the full funnel, less than half actually see linear models as the most effective approach. Instead, 69% of Australian respondents and 80% of their American counterparts expressed preference for using alternative, non-linear approaches.

Non-linear models included:

• Behavioural Flow: Optimising campaigns in real time based on consumer behaviours

• Flywheel: Focusing on post-purchase engagement and advocacy to inform future campaigns

• Micro-moments: Measuring multiple touchpoints without a fixed path

With new frameworks for measurement being ushered in, the ways in which marketers reach their consumers is also shifting quickly. This is where commerce media has entered the picture.

Commerce media is the now and next, but not everyone is up to date

The consensus from the research is clear: commerce media is the way forward for the industry. It merges full-funnel outcomes with non-linear dynamics, allowing for agile, always-on campaigns that informs, engages, and facilitates purchases to boost revenue and ROAS.

Almost all Australian marketers surveyed are on board, with 94% finding that shifting budgets to commerce media has improved campaign results.

However, despite these encouraging figures, Australian marketers aren’t quite going all in on commerce media just yet. Of those surveyed, only 14% of Australian marketers say they’re significantly increasing spend, while 41% are taking a more moderate approach. As mentioned earlier, economic conditions reign supreme for Australian marketers’ budget decisions, and they may be playing it safe for a while yet.

US marketers are betting big on commerce media

Meanwhile, in the US, marketers are doubling down. As campaign performance is their major motivator, they’re more willing to take strategic risks and try different approaches to achieve better outcomes.

This is especially evident in the uptake of emerging formats, where US marketers are far more active in experimenting with shoppable formats than their Australian counterparts (65% vs 41%), and the same holds true for Connected TV (CTV). US marketers report greater familiarity and confidence with the CTV landscape, while many Australian marketers continue to approach it with caution.

As the saying goes, “you have to spend money to make money”, which US marketers are doing by shifting 31% of their media spend to commerce media. Based on the region’s total media spend mentioned earlier, that’s potentially over $131 billion. To put it in perspective, that’s more than 10x Australia’s entire ad market and more than double the UK’s.

AI advancements

AI remains a hot-button issue throughout society, especially within the media industry. While the debates continue around its pros and cons, there’s growing consensus around its practical benefits, including creative optimisation, data analysis, and audience targeting.

At a more granular level, Australian marketers are leaning into AI for creative assistance, suggesting the underlying economic motivation behind their approaches. Conversely, US marketers recognise the data processing power of AI, which is indicative of their campaign performance North Star.

Conclusion

The underlying reason for the changes and challenges marketers face is simple: the commerce media wave is here. Those embracing it as the new way forward are already beginning to see success, while sceptics and laggards run the risk of missing the market completely.

This shift is already playing out in real time across Australia and the US, two broadly different markets but both experience the same net benefits. In the former’s case, commerce media can act as a strategic foundation in negotiating challenging market circumstances; for the latter it’s an opportunity to capitalise on a consumer base that’s set to grow even larger.

Many marketers recognise the promise of commerce media but it is difficult to break old habits. Suddenly abandoning current methods is not the answer; gradually replacing them with new practices will bring benefits. This is not a walk in the park: riding the wave of commerce media is tricky, technically daunting, and will happen very quickly. However, consumers aren’t going to wait around for marketers to master how to reach them. It’s sink or swim.